As Greece saw continued rioting in the wake of the fatal shooting of a teenager by police, two large unions announced a general strike for Dec. 10. Though Greece is used to a high degree of social unrest, this round is tied into the wider global financial crisis — and could signal wider European social unrest to come.
Rioting continued throughout Greece on Dec. 9, including fresh protests in Athens in front of parliament. Meanwhile, two large Greek unions, GSEE and ADEDY — representing 2.5 million workers and thus more than half of the total work force in the country of roughly 11 million people — announced they would hold a general strike Dec. 10, effectively shutting down all transportation in the country.
The large-scale strike could be a scene for further violence and rioting. The violence, which began following the death of a 15-year-old boy shot by police Dec. 6, has led to more than 200 arrests so far. Though rioting, protests and strikes are part of Greek political life, this round of social unrest is tied into the wider global financial crisis. The crisis is particularly worrying for Greece because its banks have been so active in the financially troubled Balkan region. The current flare-up in unrest could therefore be a harbinger of wider European social unrest.
The Greek tradition of activism and anarchism is old, but it most recently came to the forefront when student protests of the 1970s brought down the U.S.-supported “Regime of the Colonels,” the military junta that formerly ruled Greece. The role of student protests in bringing down the dictatorship in 1974 and setting Greece on the course for EU membership has legitimized protest as a political tool. Greek law, for example, forbids law enforcement from entering campuses, allowing protestors to regroup and rearm between confrontations with police.
Though the police shooting was the spark, underlying resentments against the center-right government of Prime Minister Costas Karamanlis and his handling of the economic crisis impacting Greece provided the fuel for the fire. Karamanlis’ government has been criticized ever since early elections that were called in the summer of 2007 amid extreme forest fires raging nationwide. Karamanlis hoped to build a firmer mandate for his social and economic reforms with a resounding win in the September 2007 elections, but the government response to the fires hurt his campaign, so he returned instead with only a two-seat mandate in parliament.
Opposition groups led by the Panhellenic Socialist Movement (PASOK) and the unions have used the most recent anti-police protests to revamp the opposition. Karamanlis’ social and economic reforms, which included efforts to privatize inefficient government-owned enterprises like Olympic Airlines and slim down the country’s cumbersome pension system, have been added to the list of opposition grievances. This list also includes the 28 billion euro (US$36 billion) bank bailout package, which is nearly equivalent to 12 percent of the Greek gross domestic product (GDP).
Greece might not have viable alternatives to the bailout package in light of the financial crisis. Greek banks are overleveraged in the Balkans, where they thought they could easily profit by tapping virgin markets starved for capital. The banks’ position abroad has therefore forced Athens to recapitalize with such a huge bailout.
Under normal circumstances, the government would seek to shore up its domestic banks with loans from foreign banks or by issuing bonds, or out of any (potential) government surplus (or some combination of the two). But Greece’s budget deficit is approaching, and actually might far exceed, 3 percent of GDP. Athens already is externally indebted to the tune of 91 percent of GDP — the highest rate in the Eurozone. (Belgium is in second place with a foreign debt of 64.3 percent of GDP). Even if the Greek government wanted to put itself further into external debt, there is simply no credit abroad to borrow, as international credit markets have frozen up.
The government therefore faces no choice but to come up with the money for the bailout out of its 2009 budget. This means that much, if not all, of the 28 billion euro needed for the bailout will have to be drawn from social welfare programs. The opposition feels that this is convenient for Karamanlis, because he already wanted to slash the pension fund under his original economic reforms. PASOK has therefore rejected Karamanlis’ call for political unity in light of the rioting, instead calling for new elections while the main labor unions — private sector GSEE and its public sector counterpart, ADEDY — are calling for a general strike Dec. 10. (The unions held a general strike Oct. 21.) In light of the current climate, the Dec. 10 strike could see even more violence in Athens and vicinity.
The outlines of the crisis, however, are not particular to Greece. All emerging European markets will have to figure out how to pay for stimulus packages and bank recapitalization schemes along with the rest of the Continent. With international capital dried up and most nations already running serious budget deficits, countries will have to either turn to the International Monetary Fund (IMF) or slash their 2009 budgets — or, in most cases, both, as one of the IMF’s requirements for loans usually is tight fiscal responsibility. This will mean that the negative effects of the Continent-wide economic crisis, namely unemployment, might hit concurrently with tightening budgets and less social welfare, a recipe for populist discontent and social unrest. The rest of Europe therefore will be carefully watching the Dec. 10 general strike and protests in Athens.
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